Largest Single Option Winner

Yes I know the title is misleading, you were probably expecting a $5,000 trade.  Hope you’re not disappointed but that’s not how I trade.  I’m in it for the long haul and I am trading for income, so I normally trade single contract options.  Occasionally I will go up to 5 contracts but that’s rare.

On Monday I finally made an $80 profit on a single option trade.  Most of my trades have been below $60 (I follow the Tasty Trade Network’s motto “trade small trade often”) but it was great to finally make a nice chunk of change on a single option trade.  It took about 3 weeks to materialize and I legged into it but it finally worked. 

I can pinpoint what I did differently in two simple words…manage winners.  Previously I would close the trade if it was a loss or a winner but I realized after studying some higher level traders (some on Tasty Trade, Option Alpha, and others in various groups I’m in) they manage their winners and losers to maximize their income.

The other take away from this win is to be patient and let the trade come to you.  Do not constantly check the charts and your account.  You will make fool-hearted decisions that way.  Make a plan and execute it.  You can have plan B and plan C, but when you get to plan D, E & F you have a problem and you are overthinking it. 

Looking forward to continuing this process and hope you all are having some success in this new year.  

Tasty Trade Brokerage

The fine folks over at the Tasty Trade Network are going to open their own brokerage firm this coming January 2017 called Tasty Works.  Now you will be able to trade on a platform using their concepts and philosophies.  They have integrated a lot of functionality of the Dough platform into their new one to help you make decisions while trading and have made it remarkably user-friendly.  Have a look at the site for yourself and sign up if you want to be notified when they go live.

I’ve Been Tasty Trading

I’ve been away for a little while trying to refine my strategy.  After finding the Tasty Trade network I wanted to digest a lot of what they were talking about to be able to speak intelligently about my own perspective on their approach.   

I believe that everyone has to find a trading strategy that works for them.  Each individual trader has their own risk tolerance and temperament and you can’t expect everyone to have the same results with one style.  There are however certain key aspects to trading that everyone uses to help them be successful and that’s what the Tasty Traders are using.  The concept of selling implied volatility is I think one of the foundational keys to their success.  One of their other concepts of taking profits at 50% of max profit is useful as well.

I was not as successful with one of their techniques like buying a poor man’s covered call as synthetic stock.  Time decay or theta is a very real force and should not be messed with.  

The best strategy for me at this point after trying several different approaches is to sell out of the money vertical spreads.  I have come up with a strategy that is an updated version of my previous one that I am having success with now.  Last winter I went 2 months without a losing trade with this strategy but I had some close calls.  I wanted to refine it so I could make it less stressful and more lucrative.  

I will post the strategy in the next day or so.  

Tasty Trade

I’ve been seeing these Tasty Trade guys for a while now and never really got into them because in many of the shows I watched they never really outlined any specific trades.  When I look for new strategies I mostly want to hear people give a detailed analysis of their trades, so I can see the mechanics and know how to test it out myself.  I am a very process oriented person and need to have things spelled out.  Most of the Tasty Trade shows I had seen talked about different types of trades but they didn’t go into depth as much on how to execute.  

After going through their site a bit more I did find some more in-depth analysis of trades along with some invaluable information and now I have started watching their show regularly.  What I find very helpful is that they provide statistics that will give you the confidence in placing your trade and since a large part of trading is managing emotion, this is immensely helpful.  Plus it helps to hear other people talk about their trading experiences and you don’t feel like you are alone in your fears or even your successes.  

Tasty Trade

Tom Sosnoff is one of the creators of the Think or Swim platform that mostly everyone uses to research and/or place trades.  I use it to research and paper trade ideas and then I go to my other account on Trade King to actually place my trade (low cost commissions are essential for me right now).  He has a wealth of knowledge on trading and more important for me … a wealth of knowledge in options trading.  

I watch and listen to many of the financial shows you can find online and on TV and I have learned more from watching a few episodes of Tasty Trade than from a year of watching those other shows.

I highly recommend checking them out and listening/watching some of the interviews in their archive section.  One of the more touching aspects of the site are the segments where Sosnoff coaches his daughter on how to be a trader and after several episodes she is practically a Jedi.  

Weekend Theta Does it Work?

So you think you are going to make some money over the weekend with time decay….

Not according to this study:

 

The Tasty Trade guys talk about the myth of weekend theta decay.